Comparison of telecommunication service providers’ pricing strategies for packet based services

Abstract

To remain competitive in the turbulent and rapidly evolving telecommunication market, service providers (SPs) should use proper pricing strategy to retain subscribers and even attract more subscribers. The SPpsilas pricing strategy should modify the prices continually regarding to the market to maximize its revenue. In this paper two novel pricing strategies are introduced, one based on game theory and the other based on Infinite Impulse Response (IIR) filtering. A simple strategy entitled fixed price strategy which calculates the price according to the cost is also used and compared with the other two pricing strategies. To show effectiveness of the strategies a telecommunication market is modeled in which some SPs operate and each SP uses one of the three pricing strategies. Simulation results show that the game theory-based strategy is the most effective strategy among the three strategies. An analytical model to compute average key parameters of SP in equilibrium market is also reported in the paper. This model is used to check analytical and simulative coincidence.